PerAccounting Coach, the after-tax interest rate formula is: After-Tax Interest Rate = (1 – Company’s Effective Tax Rate) x Bond Interest Rate So, you can use that to get the after-tax interest expense in dollars by expanding the formula as follows: After-Tax Interest Expens...
Marginal Tax Rate (%) = 25.0% Income Tax Liability = 25.0% × $80,000 = $20,000 In conclusion, the pro forma after-tax cash flow of our hypothetical property is $60k, upon subtracting its estimated income tax liability from its projected taxable income. After Tax Cash Flow = $80,000...
Answer (A) is incorrect because The after-tax cost of debt is the cost of debt times the quantity one minus the tax rate.Answer (B) is incorrect because The after-tax cost of debt is the cost of debt times the quantity one minus the tax rate.Answer (C) is incorrect because The ...
After-tax cost of debt can be determined using the following formula:After-Tax Cost of Debt = Pre-Tax Cost of Debt × (1 – Tax Rate)The gross or pre-tax cost of debt equals yield to maturity of the debt. The applicable tax rate is the marginal tax rate. When the debt is not ...
The pre-tax return may also go by the gross return or nominal return. To calculate the real rate of return after tax, divide 1 plus the after-tax return by 1 plus the inflation rate, then subtract 1. The after-tax real rate of return is the percentage rate of return on an investment...
Design/methodology/approach – This formula is derived by adjusting the APR provided by the lender for the length of the mortgage, the amount of discount points, the mortgage interest rate, and the borrower's tax rate. Findings – From this formula, it is found that the tax-adjusted APR ...
Here’s another example of how to calculate NOPAT using the short-form formula. As a refresher, here’s your net operating profit formula: NOPAT = Operating income x (1 - tax rate) First, you must determine your operating income. Let’s say your company’s revenue is $500,000, your ...
Using the example above, the after-tax interest rate can also be calculated. The formula for the after-tax rate is: the loan interest rate of 10% minus (30% tax savings on the 10% interest rate) = 10% minus 3% = 7%. Related Questions How do I calculate the amount of sales tax th...
while those in neighboring West Virginia, pay a top marginal rate of 6.50%, according to the Tax Foundation. In addition to income taxes, companies may be subject to other state taxes, which can also vary from one state to another.2 ...
After-Tax ROA = (NOPAT ÷ ATA) x 100 = [EBIT x (1-Tax Rate)] ÷ ATA x 100. Net Income After Taxes (NIAT) Net income after taxes(NIAT) is the sum of all revenues minus all expenses, including the cost of goods sold, depreciation, interest, and taxes. NIAT is found on theincom...